Consultant appointed on 88 km2 'template for sustainability', which will house 500,000 people.

Consultant Arup has been appointed to masterplan a multibillion-pound eco-city just outside Shanghai in China.

The new city will be built on an 88 km2 site at Dongtan, an area of largely agricultural land at the mouth of the Yangtze river. Three-quarters the size of Manhattan, it is expected to house up to 500,000 people when finished.

The development will offer unique levels of sustainability. The focus will be on the use of renewable energy sources, efficient waste management and sympathetic urban planning.

The Shanghai Industrial Investment Corporation has appointed Arup to draw up the masterplan in a deal likely to net the group millions of pounds in fees. The plan will outline the city"s architectural and economic development, as well as its social and environmental policies.

Arup director Peter Head, who will be leading the project, said the new city could prove to be a "template for sustainability in city planning" both in China and elsewhere.

He added: "The Chinese government is willing to find ways of overcoming the challenges of creating sustainable cities in the face of significant climate change, environmental pollution, water shortages and the need to use cleaner energy."

The project has the backing of both the Chinese government and the Shanghai authorities.

"The concept has already been agreed with the mayor of Shanghai," said Mr Head. "The Chinese government is very interested as well, and the premier has visited the site. It is a very big project; the whole world will be looking at it."

This is the first masterplan for an ecologically sound city Arup has carried out. The initial stage of the development, an area measuring 630 ha, is due to be finished by 2010, when Dongtan"s neighbour, Shanghai, will host the World Expo.

Arup will use staff from its offices in both the UK and China to administer the project.